Portfolio Review Helps Prevent $500K Uninsured Flood Loss

Our client, one of the nation’s leading multifamily companies, has utilized our flood zone correction service for many years to correct inaccurate high-risk flood zone determinations. After experiencing that more than 50{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} of their high-risk flood zone determinations were wrong, they became concerned that a significant percentage of their low-risk flood zone determinations were wrong, which they believed could lead to uninsured flood losses. Therefore, they asked us to perform our portfolio review service on the 128 properties in their portfolio that their lenders and insurance agent identified as being in low-risk flood zones to identify any inaccurate low-risk flood zone determinations in an attempt to prevent uninsured losses.

The Solution

Our flood risk professionals performed a portfolio review with a primary focus on identifying the “needles in the haystack,” which are high-risk buildings nestled geographically on properties identified by their lenders and insurance agent as low-risk. As part of our standard portfolio review process, we also identified locations that would be affected by future FEMA flood map changes and locations that are protected by flood protection systems (dams, levees, flood gates). The goal was to deliver an accurate foundation of flood data that will benefit the client for many years to come and enable them to make risk informed decision about purchasing flood insurance as well as whether to hold or sell properties.

The Results

Our portfolio review service identified the following valuable results and benefits:

  • 17 out of 128 locations have at least one building in a high-risk flood zone, which merits either purchasing NFIP flood insurance or performing flood zone correction to remove the building from the high-risk flood zone in order to avoid an uninsured flood loss.
  • Prevented a $500,000 uninsured flood loss, by purchasing NFIP flood insurance on one of the newly identified high-risk buildings only months before a substantial flood loss.
  • Identified14 locations where new FEMA flood maps will place at least one building at the property into a high-risk flood zone in the next few years, which enables our client to properly budget for the new flood insurance premiums and properly schedule refinance transactions in advance of the new flood insurance expense.
  • Identified one location where a levee system was going to be decertified by FEMA, which would result in the buildings being mapped by FEMA into a high-risk flood zone. This would result in a new lender requirement for flood insurance that would reduce the property’s value by more than $750,000, which led the company to decide to sell the property before the value decreased.

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